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cash management

I need help in understanding what these, (lock box, EFT, sweep account, short -term financing, jumbo CDs, and stretching payables), cash management techniques are, pros and cons as well as possible sources of additional relevant information. Also on short term financing I need help understanding what line of credit and financing receivables are and why a business would use one over the other.

I need to prepare a typical compare and contrast paper.

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Let us take each of these one by one:

lock box:

It is a service provided by banks to companies for the receipt of payment from customers. Under the service, the payments made by customers are directed to a special post office box, rather than going to the company. The bank will then go to the box, retrieve the payments, process them and deposit the funds directly into the company bank account.

Pros and Cons:

lockbox banking provides companies with a very efficient way of depositing customer payments. This is especially beneficial if a company is unable to deposit checks on a timely basis and/or if it is constantly receiving customer payments through the mail. On the other hand, lockbox banking can also be very risky. Bank employees who have access to lockboxes are rarely supervised, which opens the situation up to possible fraud. The fraud primarily occurs in the form of check counterfeiting because the checks that are in the lockboxes provide all the information needed to make counterfeit checks.

source: http://www.investopedia.com/terms/l/lockboxbanking.asp

EFT: Electronic Funds Transfer (EFT) provides for electronic payments and collections. EFT is safe, secure, efficient, and less expensive than paper check payments and collections. While it costs the U.S. government $.89 to issue each check payment, it costs only $.09 to issue an EFT payment.

source: http://fms.treas.gov/eft/index.html

The downside of EFT is that if you are not using a secure mode to conduct electronic transfer, fraud or leakage of sensitive information might occur, leading to significant misuse of such information.

Sweep account:

Features of sweep account:

Automated link between your checking account and an investment account without customer intervention
Excess cash above a predetermined balance in your checking account is automatically invested into a money market mutual fund
Income is earned daily and dividends are automatically deposited into your checking account each month

source: ...

Solution Summary

I need help in understanding what these, (lock box, EFT, sweep account, short -term financing, jumbo CDs, and stretching payables), cash management techniques are, pros and cons as well as possible sources of additional relevant information.

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